Chile’s, Inc. currently produces and sells 4,000 units of a product that has a contribution margin of $6 per unit. The company sells the product for a sales price of $20 per unit. Fixed costs are $18,000. The company has considering investing in new technology that would decrease the variable cost per unit to $8 per unit and increase fixed costs to $33,000. The company expects the new technology to increase production and sales to 9,000 units of product. What sales price would have to be charged to earn a $75,000 target profit?
Chile’s, Inc. currently produces and sells 4,000 units of a product that has a contribution margin of $6 per unit. The company sells the product for a sales price of $20 per unit. Fixed costs are $18,000. The company has considering investing in new technology that would decrease the variable cost per unit to $8 per unit and increase fixed costs to $33,000. The company expects the new technology to increase production and sales to 9,000 units of product. What sales price would have to be charged to earn a $75,000 target profit?
Chapter10: Short-term Decision Making
Section: Chapter Questions
Problem 4EB: Dimitri Designs has capacity to produce 30,000 desk chairs per year and is currently selling all...
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Chile’s, Inc. currently produces and sells 4,000 units of a product that has a contribution margin of $6 per unit. The company sells the product for a sales price of $20 per unit. Fixed costs are $18,000. The company has considering investing in new technology that would decrease the variable cost per unit to $8 per unit and increase fixed costs to $33,000. The company expects the new technology to increase production and sales to 9,000 units of product. What sales price would have to be charged to earn a $75,000 target profit?
a-$18
b-$22
$c-20
d-$16
e-$8
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